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Cal. Specialty Insulation, Inc. v. Allied World Surplus Lines Ins. (CA2/7 B324805 5/17/24) Negligence | Indemnification of Employment Contractor

By May 17, 2024June 22nd, 2024Uncategorized

This case centers on a commercial general liability insurance policy that Allied World Surplus Lines Insurance Company (Allied World) issued to California Specialty Insulation, Inc. (CSI).  CSI filed an action for declaratory relief after Allied World refused to defend and indemnify CSI against a negligence claim following a construction site accident.  The parties dispute whether one of the policy’s exclusions from coverage for bodily injury liability applies under these circumstances.

The policy excludes from coverage bodily injury to the employees of any “contractor.”  The term “contractor” is not defined in the policy.  Allied World contends the term is unambiguous and the exclusion precludes coverage for the negligence claim in question.  CSI takes the opposite view.  It argues the term is ambiguous and the exclusion does not apply to the negligence claim.

After the parties filed cross-motions for summary judgment, the trial court ruled in CSI’s favor, granting its motion and denying Allied World’s.  The court determined the term “contractor” in the disputed exclusion was ambiguous, and ultimately construed the term in CSI’s favor.  We reach the same conclusion as the trial court.  The term “contractor” in the disputed exclusion is ambiguous.  Based on CSI’s objectively reasonable expectations, the exclusion does not apply to the negligence claim in question.  Therefore, we affirm.